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Obamacare cost up by $1 Trillion

Studies show that Obamacare will probably cause at least 1/3 of small businesses to stop providing health care, forcing their workers to turn to the government option. In the case this happens, Obamacare suddenly will cost $1 Trillion more than predicted, because Pres Obama’s belief is only 7% would drop coverage. But why would a company keep paying for health care, if they do not have to? That the coverage they end up getting may not be as good as what they now have is another issue entirely.

As it is, even Howard Dean, a doctor and former DNC chair, admits that this is what probably will happen. He thinks it is a good thing. Of course, no one is asking us how we’ll pay for the additional $1 Trillion.

Not just the small businesses. My husband’s employer (8,000 or so employees), has let us know that as soon as they can, they’re dumping us all into whatever the “exchanges” provide. I’m so thrilled about that!

The bottom line on this is that Obamacare moved us exactly in the wrong direction on health care. As many of us pointed out, the solution was to get consumers (patients) more involved with controlling costs directly with their doctors. When this happens (elective surgery, lasik, etc), costs go down. Instead, Obamacare tries to micromanage health care to manage costs and coverage in ways that make it more expensive and cause employers to drop coverage. And of course costs never come in less than expected — they are always many times more than expected.

Exactly. History shows that monopolies are inefficient, expensive and very wasteful.

When Standard Oil was broken up, each of the “little” oil companies ended up much bigger than Standard ever was. When AT&T was broken up, we went from copper wire and a dial phone that we could not own to cell phones, and telecommunications advances that are today incredible to imagine. The risk of a break up of IBM caused them to separate their new PC business from the operating system, opening the door to a wide variety of PC companies.

Meanwhile, when the government allows a monopoly, or IS the monopoly, we get inefficiencies. On the $878 Billion stimulus package, the White House Economic Council has determined it created or saved about 2 million jobs. That’s a good thing. However, each job cost $278,000! That’s the very, very bad thing, because it meant money taken out of the economy where it could have stimulated businesses according to demand and innovation, and put most of it into overhead that really did not grow anything. We would have done better to tell small businesses that we would pay a salary of $30,000/year for two years for each new hiree, if they would hire more people. We could have had 8-10 million people in jobs instead, guaranteed for at least 2 years.

That is what the market can do, when given a chance.

If we give people vouchers or health savings accounts (HSA), instead of a government system, competition will kick in. Businesses can get out of the business, without a giant government overhead that right now wastes billions. Imagine Medicare in vouchers. Right now there is an estimated $300-450 billion waste and fraud every year. That would be done away with, and create an immediate savings, some of which could be included into the vouchers to ensure a quality program.

The same could be done for Medicaid. In fact, if all were given a HSA, then it would be upon the individual to discuss payments with doctors, etc., and a real form of competition would occur. If one doctor wants $1000 for a procedure, and another will do it for half the price, more people will go to the second doctor. As mentioned, this is what is happening with elective surgeries, such as Lasik.

So, why don’t those losing health coverage through their employment just embrace the independence instead of being dependent on whatever coverage the government will provide them? I can think of reasons, but none of them mesh with the individual-based cornucopia promised in comments above.

Because most people and groups (businesses, unions, etc) will take whatever advantage is offered to them. Secondly, the system and regulations are set up so that it makes it easier to work via an insurance company than with a HSA.

The reality is, we cannot afford Medicare and Medicaid, as they have Trillions of dollars in unfunded mandates that many expect to reach $100 Trillion within just a few years. You think trying to fix a $14T deficit is tough? This will make it look like a cake walk.

John M, the answer to your snarky question is actually pretty easy for anybody who has tried to price out health insurance: there are no options that are affordable to most people. I live in a low-cost area of Colorado, and health insurance equivalent to what I get at my job would cost $1500 a month or more. If you live in New York, California or Florida, fuggetaboudit.

So, if there is no inexpensive health insurance, we must ask ourselves, a)was it always this way? and b)why is health insurance so much more expensive than, for example, homeowners insurance? The answer to the first is, not even close. My grandfather sold insurance in the 1960s and you could get a health insurance policy for $5 a month. Your read that right, $5 a month. And homeowners was $2 or $3 a month. So, health insurance was twice as expensive as homeowners. Well, today, health insurance is 10-15 times as expensive as homeowners. Why is this? Because medical costs have gone up. Why have medical costs gone up: two main reasons, 1)third party payments and 2)malpractice insurance.

So, it seems to me the answer to your snarky question is not to “embrace independence” but instead to embrace actual solution to the health care malaise that deal with the actual sources of the problem, ie getting rid of third party payer systems and trying to lower malpractice costs.

Less war more health care…medicare costs are about 4% to 3% of a dollar for admin expenses, the rest goes to health care…private health care gets as much as 20% for admin costs (shareholders and top employees)whats left goes to health care for those who are well, the sick already being purged from the private health care rolls…Medicare for everyone with private insurance as a back up

You are not pushing for more health care, but more government managed health care. We’ve already established that the system is woefully corrupt, with hundreds of billions in fraud/waste/abuse every year. We’ve also established that unfunded mandates will turn it into a $100 Trillion deficit that will totally crush our nation.

You are ignoring on Medicare the real overhead costs. Its overhead is actually similar to private industry. The difference is, private insurance companies have an incentive to reduce overhead and waste: it impacts their profits and the ability to offer a good product at competitive prices.

Geoff noted above that malpractice is one of the key reasons for high prices. Trial lawyers keep the costs high by milking the system for hundreds of billions every year. Many gynecologists have switched to other medical practices, because the death/abnormalities of a baby can financially ruin them – solely because it is easy to convince a stupid jury that the evil, rich doctor should have been able to save the baby. They tend to ignore the facts: 1. Fewer babies die from defects or other problems today. 2. Fewer mothers die during child birth (a leading cause of female death for most of human history). 3. With babies often being born very early, the possibility of deformations rise dramatically.

Another factor is there is no incentive for the patient or medical staff to only give the amount of care needed. Medicare undercuts prices so much that doctors will often prescribe extra procedures or tests to make it worth their while. This also helps protect doctors from lawsuits later on. If people had more involvement in the money side of things, they wouldn’t run to the doctor every time they had a sniffle. My 81 year old mother-in-law runs to doctors several times each week. And Medicare covers it all. A couple years ago, she had severe rashes. She would try a medication from one doctor for a couple days, get upset because it wasn’t immediately working, and then go to another doctor for another set of medications. She has no problems going to see many doctors and trying many tests and meds, because Medicare pays for it.

As much as I love my mother-in-law, her attitude towards this is typical of a group that sees Medicare as a right, not a benefit. And they insist that they get more and more (such as prescription medicine assistance, which was never paid for by them in their working lifetime).

Such systems are bankrupting other nations, like Greece and France. This system will bankrupt us, also.

Even as a Libertarian, I’m not saying we totally do away with having a health care program. I am saying we can do it better and more cheaply by turning it over to the market place. And there’s less government corruption involved.

I don’t doubt that the Obama Administration was overly optimistic with their numbers, but I don’t trust other partisans to be completely partial either.

I’m not optimistic about Obamacare myself. But that’s because I think it didn’t go far enough. I would have liked a public option with rationed care (real death panels) like they have in most other developed nations. Those who can afford better care can pay for it themselves. But without the good fortune of insurance, millions can’t afford to get just the basics. My own father is uninsurable, as a melanoma survivor, and unemployed for several years. Lots of bad luck in his life. We all just pray more bad luck won’t come along.

In health care, I believe we should make a lesser quality option for those of modest means who don’t qualify for medicare, but are too strapped to pay for insurance. In my mind, it’s the only humane thing to do. I buy generic food, live in cheap housing, drive a beat up used car. Why can’t I go to a cheap, bureaucratic state clinic like I could when I lived in Europe when I’m deathly ill, instead of waiting for an ambulance to come take me to St. John’s and bill me for $70,000, which they will generously take down to $50,000, and allow me to pay off over time.

Nate, this is why many of us suggest a voucher system. We could provide a basic voucher for all people, including your father. We would set some conditions with insurance companies on the lowest level of care they could provide for the voucher, and then let them compete on the market, offering more than the bare minimum.
For those who want a premium health care, they could pay more out of their own pocket.

This would get government out of health care, with the exception of collecting the funds. All people could be given care, yet the system would always be funded without any unfunded mandates: a key threat to our economy.

The only problem in getting there is that many liberal Democrats want a program they can control, and in which they can unionize, thus providing themselves with Democratic voters for future elections. We stop the buying of votes by turning the major decision of health care back to the individual/family, rather than having government dictate any of it.

The voucher system sounds interesting, and I’d like to learn more about it.

However, the problem I have with putting people’s health in their own hands is that people are idiots. This is a fundamental difference between liberals and libertarians. Libertarians trust the people. Liberals trust the state over the people. There is a similar argument going on with privatizing social security. Are people trustworthy enough not to squander the trust that is given to them? I think the answer to that question is for many people, no. So I believe in social safety nets. It’s Satan’s plan on a limited scale to account for human stupidity.

I agree that people are idiots. I work in a prison, where I deal with idiots all day long….

That said, I would rather make my own stupid decisions and live with the consequence, than have some government idiot making the decisions for me.

History and biology show that when freedom is involved, the idiots eventually are removed from the gene pool, and the smarter ones who learn to adapt end up succeeding and thriving.

History also shows that big governments end up with huge bureaucracies that deny freedoms and opportunities to the average person.

If a person is offered a voucher, don’t you think that person should be smart enough to take it to an insurance company and get insured? Millions get their own insurance already, and are able to figure out how to work within the system.

Finally, I hate the hubris of such liberals who think they are smart enough to handle every crisis better than the average man. Al Gore, Barack Obama, and others may be bright fellows, but they are no smarter than me in every thing, and are likely dumber than me in many things. Why should I have some government lackey control my life, when I can do it just fine for myself?

Nate, the elitist idea that people cannot handle their own health insurance is disgusting. People buy their own car insurance, they buy their own homeowners insurance, they buy life insurance, etc. It takes five minutes to get an Geico account, put in your car information and sign up for auto insurance on-line. It would take about that long, or less, to sign up for health insurance.

People need to take responsibility for their own lives, and if they don’t, they need to suffer the consequences. As has happened in past years, charity will step in when people are really stupid and irresponsible. Let me ask you to consider something: was medical care in the US for the average person less expensive and better (in terms of access, not in terms of technological advances) in 1940 or now? A doctor would charge you $2 to come to your house and check out your kid who had a fever. Can you imagine a doctor coming to your house today? If you didn’t have money, you could pay over time or through swapping things. If you were poor and had cancer, you would go to a charitable hospital, and you received care. Inserting these ridiculous health insurance companies in the process started the slide to what we have today, which is impersonal, bad health care that is ridiculously expensive and does not care about customer satisfaction.

I think the problems with government health care are intentional. They have to be. I can’t believe the people in charge are that stupid. I think it’s like ripping off a bandaid. They know we’re insolvent, so they’re just trying to get the crash over with as soon as possible. Plus rack up as much as they can on their credit cards before they are taken away.

I know all the readers of this blogs minds are made up and don’t want to be confused with facts ( THAT’S ALSO THE CASE WITH ME) BUT—–

First of all the Mckinsey study has been thourughly discredited. It is a guess about how may employers MIGHT drop health care coverage. Nothing more. It should be taken with a very large grain of salt. In any case the percentage of employers who are dropping health care coverage was dropping ling before “Obamacare” was passed.

Under the new law you would be eligible and indeed required to get health care coverage through the health care exchanges. You could not be turned down because of pre-existing conditions and the prices would be community rated, i.e. everybody pays the same rate. If the cost is still too great a burden you would be eligible for subsidies to reduce your cost.

The notion that health care costa have soared because of malpractice suits has also be discredited. Malpractice costs have been shown to only a small fraction of the increase in health care caosts. Our aging population and techological advances are clearly the main reason for increasing costs. The image of the doctor who would make a house call and take two dollars for a fee and might accept a chicken as a payment has about as much relevance to modern health care as the horse and buggy does to 2011 transportation issues.

Your notion that the goverment always screws up health care has to deal with the facts that almost all advanced industiral nations have some form of gorvernment run or regualted health care insurance schemes. ALL of the countries have about the same level of health as measured by life expectancy and infant mortality rates yet spend a significantly lower ammont per capita and as a % of their GDP on health care. They must me doing something right.

John willis, I would be interested in some sources for your claims re: the McKinsey study and also your claims regarding malpractice insurance. I don’t have the time or inclination to do the “health care debate” all over again, but I would be interested in seeing some sources. Note that I say that malpractice is only one source of price increases. The primary one is the third-party payer phenomenon, imho. Technology is always improving in every area. In 2011 dollars, TVs used to cost $3000 in the 1950s — now you can get an incredible flat screen for $400. In a truly competitive environment (which we definitely do NOT have) technological improvements would be price-neutral or even deflationary for health care. Indeed, Lasik, a service with no third party payer phenomenon, continually improves service without increasing prices because there is true competition.

Geoff, I too have romanticized notions of medical care in the 1940s, the family doctor and such. I’m fond of the sanatorium system, and the private little utopias the period created to try to give the insane and the sick a clean, stress free place of rest. I too wonder how it has become so impersonal and exactly as you said, “bad care that is ridiculously expensive and does not care about customer satisfaction.”

You could be right that the insurance system has taken away a capitalist incentive to serve the customer and keep rates low so that they won’t go elsewhere. Maybe that’s how it worked back then, but I’m unfamiliar with it. I would guess that medicine was also far less expensive because it was far less invasive and technologically advanced. But prices are also inflated because the kids are in the candy store, no one is minding the till. I don’t have answers to these problems, but I do know that as an uninsured patient, I’m asked to pay higher prices out of pocket for services than the negotiated terms medicare pays for those same services (and insurance companies.)

I’m not sold totally on government solutions to the health care mess, and I’d like to study some workable alternatives presented. Have there been state or private solutions like Romneycare that have had success? We already know that socialized medicine works adequately for the general public in other countries, so we know that it could work in it’s imperfect way here as well. Sure these people come to the US for top of the line care, but that wouldn’t have to change if you were willing to pay for it yourself.

Socialized medicine does not work adequately. It creates a system of rationing where bureaucrats decide who gets care and who doesn’t. (And anytime there are bureaucrats, there is corruption, with people bribing or using connections to get to the front of the line for, for example, elective surgery).

There are real free-market solutions to the problem. If you are interested, I would suggest poking around this page a bit and reading some of the suggestions.

But critics of the current system say that 10 to 15 percent of medical costs are due to medical malpractice.

A.

That’s wildly exaggerated. According to the actuarial consulting firm Towers Perrin, medical malpractice tort costs were $30.4 billion in 2007, the last year for which data are available. We have a more than a $2 trillion health care system. That puts litigation costs and malpractice insurance at 1 to 1.5 percent of total medical costs. That’s a rounding error. Liability isn’t even the tail on the cost dog. It’s the hair on the end of the tail.

a quick google search will give you numerous sources confirming that the combined costs of the malpractice insurance have not increased as a percentage of total health care costs, and so hardly comprise one of the two main reasons for that increase as alleged in comment 8.

To blame high health insurance costs largely on third party payments and malpractice insurance is to ignore many other factors. We want the best, the latest and as much of it as we can get. We will not accept less. Part of what we are paying for is all the research and development that goes into coming up with all that stuff, whether it’s the latest surgical techniques or the latest drugs. I suspect we would have high health care costs without government involvement at all. Recognizing that we have many flaws in our system, principally that we do not reward the system for keeping us healthy, can you show we a nation somewhere in the world where this libertarian, utopian vision of healthcare actually works the way you think it will work?

With the costs of training medical people today (back in 1940s, there were few surgeries done, except hacking off limbs, for example. No cancer treatment, no heart surgery, no brain surgery, etc), we can see that we will not get back to the 1940s country doctor.

Just because medical malpractice seems like a “rounding error” it is still a real component that affects what doctors and hospitals charge patients. It needs to be dealt with.

That said, there are other things that affect the high cost:

1. Bureaucratic overhead: Medicare fraud/waste/abuse is $300-400 billion a year. Medicaid is just as bad.

2. Government regulation that forces hospitals to treat people who choose not to be insured (versus not able to afford), causes huge price increases in everything for the rest of us. Uninsured tend to use emergency rooms, where the cost of service is more than at a walk in clinic. The costs are passed onto us.

3. Government regulations that create huge overhead for doctors and hospitals increase the cost of health delivery. Medicines are often very expensive because of the process they must go through to satisfy the FDA.

4. While Medicare recipients are happy with the benefits of the program, it is becoming unrealistic and expensive. Unlike in the 1960s, people now live well beyond 65 years of age. And the retirees are insisting on more and more benefits, none of which they have paid for (Medicare Part D is one example).

5. The unfunded mandates attached to Medicare and Medicaid (including Medicare Part D) will soon be in the tens of trillions of dollars. Some estimates are as high as $100 Trillion. This shows that the current programs will bankrupt us, which then means no one will be insured. It has to be fixed, which may mean less benefits.

6. Many retirees and others on government and private insurance plans believe they should get Rolls Royce treatment, while only paying for a Yugo. We have to get to a point where we realize that we should not be paying for heart surgery or a new hip for someone 80 years old. Now, if they have their own insurance or money, fine. But somewhere we have to say we cannot afford everything for everyone.

7. Obamacare does not cover everyone. There will still be millions left outside the program. It increases the costs to do business for doctors and businesses. It increases regulation, which will also increase costs.

There are many other big issues, but I’ll leave it at these. I’ve studied many possible solutions for these issues, and come down to just one possible solution:

1. A patient’s bill of rights
2. A voucher system for all Americans, where all health care companies must be willing to accept the voucher for a government established minimum level of care.
3. Allow a company licensed in one state to compete everywhere. No company can offer less than the minimum requirements, but may offer more incentives to purchase their insurance. Competition will drive prices down. Government overhead will be minimal, while insurance companies will seek to keep their overhead minimal, as well.
4. Since all people will be insured, including healthy 20-somethings, it will balance the risks of insuring those who currently are not insurable (cancer patients, etc).
5. If an individual desires better service or more options, he/she may pay the additional insurance premiums to get more.
6. If an individual is dissatisfied with an insurance company, they can always go shopping elsewhere. Currently, I review my car insurance every year or two, to see where I can get a better price. And I often do. I can do the same with health voucher, and this will continue the competition between companies.
7. Elective surgeries will remain elective, and not part of the voucher.
8. The voucher will pay for generic drugs. Those wanting better and more current medicines can pay for more from their pocket or from the market of insurances offered.
9. Tort and regulation reform. We need to get out of moderating hospitals and doctors so much. If we cut regulations just by 1/4, we could reduce costs by billions each year.

There are a few other things I could add, but I think you get my drift on this. Let the market, albeit through a third party payer, work the system for us. It may not be as efficient as Health Savings Accounts, but it means individuals do not have to weather through decisions each time they go to the hospital, either.

Rame, I like a lot of the options you mention. Obamacare is inadequate, and I’ve always felt that way.

But what Obamacare has done, if nothing else, is force Republicans to try to put forward substantive and workable alternatives. If Obamacare is repealed, the American people will want something better to replace it, and not just going back to the status quo.

If Republicans and Libertarians can really find the political power to enact some of these good ideas you’ve put forward, I would be happy with that. What I want to see is real progress, universal coverage, lower premiums, and curbing runaway costs. I don’t care how that is done.

Unfortunately political realities in Washington currently do not allow for wholesale reforms and complete reworkings. Obamacare, as watered down and riddled with compromise as it is, was near political suicide for Obama for overreaching. In politics, you have to move slowly, tinkering on the margins. Anything more aggressive than that will kill your party, even if it were hypothetically possible.

So one little reform at a time. I think that is going to be the only way forward.